More steps may be needed on economy: Geithner

By IBT Staff Reporter On 08/02/09 AT 10:40 AM

U.S. Treasury Secretary Timothy Geithner said on Sunday more actions may be necessary to firm up economic recovery, including extended unemployment aid, and declined to rule out future tax hikes to reduce massive budget deficits.

Geithner also said the government needed to show the will to reverse massive deficits after the recovery, including raising tax revenues if necessary.

We have to bring them down to a level where the amount we're borrowing from the world is stable at a reasonable level, Geithner said on ABC's This Week with George Stephanopoulos.

And that's going to require some very hard choices. And we're going to have to do that in a way that does not add unfairly to the burdens that the average American already faces.

He said it was too soon to make a judgment about what it's going to take to reduce deficits.

There were signs the economy is starting to improve, Geithner said, but we have a ways to go before it starts growing enough to create jobs again.

Although economic forecasters predict that output will turn positive in the second half of this year, Geithner said as that happens, the pace of job losses will slow materially.

But the Obama administration may have to look at extending unemployment benefits toward the end of the year to deal with a stubbornly high jobless rate.

I think that is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year, Geithner said.

Former Federal Reserve Chairman Alan Greenspan, speaking later on the same program, said strengthening confidence in the economy could be dashed if home prices were to take another turn downward.

Greenspan told the ABC program he didn't believe that a steep drop was in store, but home prices had stabilized only temporarily.

It is possible that could get a second wave down, Greenspan said. Under those conditions, we would get a very significant change in the underlying confidence in the consumer area, as foreclosures rise and more home values fall below their mortgage levels.

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